Drea budgets $50 for entertainment, which for her includes going to the movies or to basketball games at her college. She pays $8 for movie tickets and $15 for tickets to basketball games. The combination of four movie tickets and two basketball game tickets lies inside Drea's budget line. True O False

Drea budgets $50 for entertainment, which for her includes going to the movies or to basketball games at her college. She pays $8 for movie tickets and $15 for tickets to basketball games. The combination of four movie tickets and two basketball game tickets lies inside Drea's budget line. True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The principle of diminishing marginal utility says that people don't enjoy consuming more of a good. True or False and Explain the choice
Pam has a monthly budget of £120 to be spent on T-shirts and trainers. She could afford to buy two T-shirts and two pairs of trainers. She could also buy eight T-shirts. In each case, she would be spending her entire monthly allowance. Calculate the price of a T-shirt and the price of a pair of trainers. Write down Pam’s budget equation and draw the corresponding budget line. Mark the two consumption bundles mentioned above. In your graph, clearly label the axes, the budget line, and calculate the coordinates of the points of intersection of the budget line with each axis. Interpret each of those points. Discuss how Pam’s budget set would change if the price of a T-shirt doubles. Show the relevant changes graphically. How should Pam’s income change so that she could still afford to buy two T-shirts and two pairs of trainers? Discuss how Pam’s budget constraint would change if the government imposed a tax of £3 per each pair of trainers.
Suppose Amanda spends all of her income of $1,000 on mascara (M) and chocolate (C) The prices per unit are PM = $5 and PC = $10. What is the maximum amount of chocolate that she can consume? a. 200 b. 5 c. 100 d. 1,000
Josh has a monthly income of $1000. He spends this income on gummy bears (G) and "other goods"(X). The first 2500 gummy bears always cost $0.2per unit. When buying more than 2500 gummybears, they are offered at a discounted price of $0.1per unit for any amount above 2500. The unit price of the "other goods" is $1. 1. Draw the budget set. 2. Using optimization techniques, determine Josh’s optimal bundle given that his preferencescan be represented by the utility functionU(G, X) =GX.Make sure to also Illustrate youranswer graphically. 3. Suppose instead that Josh’s utility function isV(G, X) =√GX−25. How would that changeyour answer to subquestion 2? Explain.
Jody has $360 to spend on her summer vacation. She decided to use the moneyon trips to the zoo and on tickets to the movies. Her original budget constraintis shown below. Let X represent movie tickets and Y represent trips to the zoo.i. What is the equation of the original budget constraint? ii. What is the price of a movie ticket? a trip to the zoo? iii. Assume a price change occurs and Jody now face the new budgetconstraint. What is the equation of the new budget constraint? iv. With the new budget constraint, what is the price of an amusement parkticket? a baseball ticket
34) Consider Dianna who has a $25 fast food budget per month. She can purchase salads (S), hamburgers (H), or chicken strips (C). The price of a salad is Ps=$3, the price of a hamburger is PB-$2 and the price of chicken strips is Pc $4. Fill in the table below. You will use your solutions to answer questions 34-36. # Hamburgers # Salads 1 2 2 MU Salads 36 30 c) 4; 3; 4 d) 5; 4; 5 MU/P Salads 1 2 3 4 5 MU hamburgers 5 In the optimal consumption bundle for Dianna, she will purchase chicken strips. a) 2; 1; 2 b) 3; 2; 3 28 22 16 36) Dianna total utility from her consumption bundle is a) 126 b) 504 c) 106 d) 398 MU/P # Hamburgers Chicken Strips T 2 3 7 salads, 4 5 35) Dianna's utility is maximized where the marginal utility per dollar spent on each item is equal to a) $10 b) $12 c) $14 d) $16 MU Chicken Strips 72 64 56 48 40 hamburgers, and MU/P Chicken Strips
Jody has $360 to spend on her summer vacation. She decided to use the moneyon trips to the zoo and on tickets to the movies. Her original budget constraintis shown below. Let X represent movie tickets and Y represent trips to the zoo.i. What is the equation of the original budget constraint? ii. What is the price of a movie ticket? a trip to the zoo? iii. Assume a price change occurs and Jody now face the new budgetconstraint. What is the equation of the new budget constraint? iv. With the new budget constraint, what is the price of an amusement parkticket? a baseball ticket?
Larry and Teri allocate their consumption between two goods: hats and bats. The price of hats is €5 each, and the price of bats is €10 each. For Larry, the marginal utility of the last hat consumed was 8, and the marginal utility of the last bat was 24. For Teri, the marginal utility of the last hat was 6, and the marginal utility of the last bat was 12. Which consumer is not maximizing his/her utility? How can you tell? How should he/she change their allocation?
In Philip's world, only two goods give him utility: economics books (B) and computer games (G). His monthly budget is $100, while a book costs $5 and a game costs $10.
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Q 2
In Philip's world, only two goods give him utility: economics books (B) and computer games (G). His monthly budget is $100, while a book costs $5 and a game costs $10.